How to Form a Delaware LLC from India: Complete Guide

An Indian resident can own a US company, and the questions that follow are practical rather than legal: which state, which structure, and how the money moves.

The timetable is usually set by one step, the federal identification number, which takes longer for a founder abroad than for one in the country. Committing to a launch date before it arrives is a common and avoidable mistake.

This covers whether it is permitted, why Delaware is chosen so often, the formation steps in order, the tax position on both sides, and what the whole thing costs to set up and to keep running.

Can an Indian Resident Own a US LLC?

Yes. US federal law has no residency or citizenship requirement for owning an LLC. An Indian resident can be the sole member of a Delaware LLC without ever visiting the United States.

Why Delaware?

• No state income tax on income from intangible property
• Low annual maintenance cost ($300 franchise tax for LLCs per year)
• Flexible operating agreement: minimal mandatory rules
• Court of Chancery: specialized business court, predictable case law
• Most US legal and accounting professionals are familiar with Delaware structures

Step-by-Step: Forming a Delaware LLC from India

Step 1: Choose a Name

The name must be unique in Delaware and must include 'Limited Liability Company', 'LLC', or 'L.L.C.' Search availability at the Delaware Division of Corporations website. Names can be reserved for $75 for 120 days.

Step 2: Appoint a Registered Agent

Required for all Delaware entities. Must have a physical Delaware address. As an Indian resident, you must hire a registered agent service, you cannot serve as your own. Cost: $50-$200/year.

• Harvard Business Services: $50/year, popular with international founders
• Northwest Registered Agent: $125/year
• Incfile: Often bundled with formation packages

Step 3: File Certificate of Formation

File online at corp.delaware.gov or by mail. The Certificate of Formation requires:

• LLC name
• Registered agent name and Delaware address
• Organizer name and signature (can be you or a formation service)

State filing fee: $90. Processing time: same day online, 3-5 days by mail. Expedited processing available for additional fees.

Step 4: Create an Operating Agreement

Delaware does not require filing an operating agreement, but you should have one. It establishes:

• Member ownership percentages
• Decision-making authority
• How profits are distributed
• What happens if a member wants to exit

For a single-member LLC, a simple one-page operating agreement is sufficient.

Step 5: Get an EIN (Without a Social Security Number)

As an Indian resident, you likely do not have a US SSN or ITIN. You cannot use the IRS online EIN application. Instead:

• Complete Form SS-4 (available at irs.gov)
• In the field asking for responsible party SSN/ITIN, write 'Foreign, No SSN'
• Fax to the IRS: +1-855-215-1627 (international fax)
• The IRS will call back with your EIN within 4 business days (have a US or international number where they can reach you)
• Alternatively, mail Form SS-4 to the IRS, allow 4-6 weeks

Pro Tip: Some formation services (Stripe Atlas, Firstbase, Clerky) handle EIN applications for international founders as part of their package. Worth the cost if you are unfamiliar with the process.

Step 6: Open a US Bank Account

This is the biggest practical challenge for non-US residents. Options:

• Mercury (mercury.com): Online bank for startups. Accepts international founders with a US LLC. Requires ID verification (passport + selfie). Free to open.
• Relay (relayfi.com): Similar to Mercury, remote account opening, no minimum balance
• Wise Business: Not a traditional bank, but allows you to receive USD payments. Easier to open remotely.
• Traditional banks (Chase, BOA): Require in-person visit at a US branch. Not practical from India without travel.

Tax Obligations for a Delaware LLC Owned by an Indian Resident

Federal Tax Classification

A single-member LLC with a non-US resident owner is treated as a disregarded entity for federal tax purposes unless it elects C-corp or S-corp treatment. Implications:

• If the LLC has no US trade or business: no US federal income tax on foreign-sourced income
• If the LLC earns US-source income: subject to 30% withholding tax (or reduced rate under India-US tax treaty)
• If the LLC is Effectively Connected Income (ECI): taxed at graduated US rates, requires Form 1040-NR

Form 5472 + Form 1120: The Critical Filing Requirement

Since the TCJA (Tax Cuts and Jobs Act 2017), a single-member LLC with a foreign owner must file:

• Form 5472 (Information Return of a 25% Foreign-Owned US Corporation), even if the LLC had zero transactions
• Form 1120 (a pro forma, abbreviated version) as a cover for Form 5472

Due date: May 15 (with 6-month extension to November 15). Penalty for failure to file: $25,000 per year. This is not optional.

Delaware Franchise Tax for LLC

Delaware LLCs pay a flat $300 annual franchise tax due June 1. A $200 penalty applies if late.

India-Side Tax (FEMA Compliance)

Indian residents investing in a US LLC must comply with RBI/FEMA regulations:

• Outward remittance under the Liberalised Remittance Scheme (LRS): up to $250,000 per financial year per individual without RBI approval
• Investment in a US LLC qualifies as overseas direct investment (ODI), report on Form ODI via AD bank
• Annual Performance Report (APR) required for each year the investment exists
• Income earned by the US LLC is taxable in India as foreign income of the Indian resident

Costs Summary

Frequently Asked Questions

Written by

Abhinav Gupta, CPA, CA, MBA

Abhinav works with business owners across the US on industry-specific bookkeeping, from dental practices and restaurants to construction and e-commerce. He writes about what each trade's books actually need. Connect on LinkedIn